Day 1 in my quest for Badassity

[RazorBurn]

Actually, I've been reading blog posts and doing some preparation for a few days now.  Some of the numbers I've seen are unbelievable to me, but I am willing to try.  I am 48 years old, married with two children aged 11 and 14.  My wife and I both work full time and we built our house about 15 years ago.  We refinanced last year to a 15year mortgage at a lower rate and hope to retire when it is paid off.  Attached is our current budget, including income and savings/investments.

So, where do I begin??

[AJDZee]

Hey Steve,

Welcome to MMM and kudos for opening up your family's financial situation.

I'm not as good as some of the people here at picking apart a budget, but i'll be first to give my 2 cents...

First I noticed a few numbers appear to be missing...
Nothing for house maintenance/repairs. Do you really not plan to spend ANYTHING next year to keep your house in working order? Even if you don't have any specific plans for repairs, you must plan to put money aside for when you need a new roof etc, etc, etc.?

Also nothing for gas or maintenance on your two cars? that might be an oversight?

Nothing for restaurants or other entertainment or beer/wine.  Do you really plan to NEVER do any of these ALL of next year? It seems like it's odd that there is a place on the budget for Starbucks, beer/wine, but no value allocated, so I take from that you actually ARE spending money there and just got rid of the values to help the budget fit..? or maybe this was a template you got.

After adding in those expenses I think it will be a true budget you can work from. But I'd have to say $900/month seems like a lot to feed 4 mouths.

Tennis is $200 per month, every single month for the whole year?? I hope you're raising the next [insert international tennis star].

Between cell phones, home phones, internet and television that's $350/month. That seems like a lot. If you're making $16/hr after taxes, that means almost 3 days a month of full work is going to pay just those bills. Eliminate home phone, bundle, negotiate or go to a new provider to get that cut in half.

[RazorBurn]

Thanks for the input.  The missing numbers I hope to fill in a bit as I go along.  These are all the hard numbers I have from 2014 and I didn't track a lot of expenses.  I've started on shaving down the Phone/Internet/Television expenses and plan to revisit all my other "fixed costs" and trying to beat down our groceries.  I also am planning to move some of the 12,000 I have sitting in a low interest savings account into an index fund and set up auto savings.

Any other ideas for me?

[chasesfish]

Good luck in this search, just a few more comments:

Cell phones:  There's easily $100/mo that you're setting on fire with that cell phone plan.  Regardless of what your needs are, you can cut that significantly by seeking out IPs cell phone guide.

What's the car payment situation?  How much do you owe?  Is this more than a 0% interest rate?  It seems absurd to have this payment and cash sitting in the Amex savings account.

If you need emergency cash access, can you get a home equity line against your house?

Why do you have both a home phone and cell phone?   

As another poster pointed out, a line item for Starbucks?  I hope that expense is purchasing Starbucks stock and not consuming enough of their stuff to require a line-item. 

When was the last time you shopped your homeowners insurance?  It looks high relative to your house value, but this might be a location issue.

You can do better than $900/mo in food for four people.

[ToughMother]

Seems like there are a few missing categories of potential spending before anyone can really comment on the budget:
Gas for car
Co pays for medical?
Entertainment of any sort?
Gifts during the year?
Charity?
Any travel?
Vehicle & house maint?

[AJDZee]

Seems like there are a few missing categories of potential spending before anyone can really comment on the budget:
Gas for car
Co pays for medical?
Entertainment of any sort?
Gifts during the year?
Charity?
Any travel?
Vehicle & house maint?

Exactly to my point, get those other expenses in there to start off with a true budget. Have you thought about using Mint.com? Some people are uneasy about using it, but a lot of people on here use it (including me) for many years with no problem. That should help you objectively estimate your gas/gift/entertainment/etc costs of 2014.

Once you have all expenses in there, the black belt in me says to then pareto your spending categories and look at the biggest expenditures.

Unlike most on here I won't yell at you for starbucks haha the odd drink here and there won't hurt if it brings you more happiness than the cost of it. I just brought it up because it was odd it had it's own line, with no value, so i reckon there was some funny business going on.

The food bill can be crushed almost in half. You don't need to spend hours couponing either. Either you're shopping at a high-end grocery store, organic, or you eat a lot of expensive cuts of meat, or you live in northern Alaska.
*I am NOT a vegetarian* but if your family had 1-2 nights a week of a vegetarian dishes it would help. (A can of chick peas is $1) Or beans, or lentils.
For meat, you can get much cheaper meats (brisket, flank, chuck) cook them longer/differently (braise etc) they are a fraction of the tenderloin/steak unit price.
Avoid boneless chicken - get bone-in chicken, or better, a full chicken, and keep the bones to make stock.
Once a week I make a roasted chicken ($7) makes 4 meals. I save the bones in the freezer as well as I pick apart all the scraps of meat left behind from the back, oyster, etc. Once a month I'll use the 4 chicken's bones to make stock which along with the reserved scraps of meat, gets turned into chicken quinoa soup.

[3Mer]

Good budget tracker, and kudos to you for getting organized to make improvements.  I had a question on the net worth section.  Did you subtract your liabilities?  The totals appear to be comprised only of your assets.  Do you have car loans, credit card balances, a mortgage?  Those need to be subtracted off your assets to calculate your net worth.

[rocketpj]

A lot depends on your location.  Personally I was shocked by the cable/internet/home phone bill - where I am we get all three for $56/mo (ironically it is more if we don't have the cable or we wouldn't have it).

Two teens in the house can make for a huge grocery bill.  We have two big preteens in our house and they easily eat double what the two adults consume.  But you can make different choices in the store for the same volume of high quality nutritious food at lower costs (beans beans beans).  Hopefully your kids are receptive to new and healthy foods and you haven't empowered them to be child food dictators (all too common).

You have motivated me to revise our family's budget and consider posting it on here.  Honestly we made it up a few years ago and it seems to be working (any additional income/reduced costs just mean more investment opportunities).

[Jags4186]

Couple observations:

1) Are you contributing to 401k?  You have line items for salary deduction on Health Insurance, but nothing on 401k, 403b, or 457.

2) I've never paid a water bill before but $150/mo sounds like a lot.  Any reason for that?

3) Ditto on the electric bill...seems very high.

4) You should budget for blank items.  For example we budget $2000/yr for gifts. We save $167/mo into a little savings account and then draw from that when we buy something.  Keeps us in control because we only spend what is in that account never more.

Same thing for restaurants/starbucks.  Its fine if you go out to eat or get lattes, but be in control.  Say "we're going to budget $150/mo to restaurants" or "our starbucks allowance is $25/mo".  Then you know if you can go out to eat or not instead of just doing it willy nilly and adding it in later.

[RazorBurn]

A lot depends on your location.  Personally I was shocked by the cable/internet/home phone bill - where I am we get all three for $56/mo (ironically it is more if we don't have the cable or we wouldn't have it).

Two teens in the house can make for a huge grocery bill.  We have two big preteens in our house and they easily eat double what the two adults consume.  But you can make different choices in the store for the same volume of high quality nutritious food at lower costs (beans beans beans).  Hopefully your kids are receptive to new and healthy foods and you haven't empowered them to be child food dictators (all too common).

You have motivated me to revise our family's budget and consider posting it on here.  Honestly we made it up a few years ago and it seems to be working (any additional income/reduced costs just mean more investment opportunities).

In the process of paring down the cell/internet/tv.  We are ditching the home phone, cutting back on our cable channels (until i'm out from under the contract and then cancelling/changing service providers).  I do have two teens and we have tried half-heartedly numerous times to cut our food budget - this time I'm hoping to be more diligent.

[RazorBurn]

Seems like there are a few missing categories of potential spending before anyone can really comment on the budget:
Gas for car
Co pays for medical?
Entertainment of any sort?
Gifts during the year?
Charity?
Any travel?
Vehicle & house maint?

Exactly to my point, get those other expenses in there to start off with a true budget. Have you thought about using Mint.com? Some people are uneasy about using it, but a lot of people on here use it (including me) for many years with no problem. That should help you objectively estimate your gas/gift/entertainment/etc costs of 2014.

Once you have all expenses in there, the black belt in me says to then pareto your spending categories and look at the biggest expenditures.

Unlike most on here I won't yell at you for starbucks haha the odd drink here and there won't hurt if it brings you more happiness than the cost of it. I just brought it up because it was odd it had it's own line, with no value, so i reckon there was some funny business going on.

The food bill can be crushed almost in half. You don't need to spend hours couponing either. Either you're shopping at a high-end grocery store, organic, or you eat a lot of expensive cuts of meat, or you live in northern Alaska.
*I am NOT a vegetarian* but if your family had 1-2 nights a week of a vegetarian dishes it would help. (A can of chick peas is $1) Or beans, or lentils.
For meat, you can get much cheaper meats (brisket, flank, chuck) cook them longer/differently (braise etc) they are a fraction of the tenderloin/steak unit price.
Avoid boneless chicken - get bone-in chicken, or better, a full chicken, and keep the bones to make stock.
Once a week I make a roasted chicken ($7) makes 4 meals. I save the bones in the freezer as well as I pick apart all the scraps of meat left behind from the back, oyster, etc. Once a month I'll use the 4 chicken's bones to make stock which along with the reserved scraps of meat, gets turned into chicken quinoa soup.

Yep I set up with Mint and I'm now tracking and saving all receipts to get a better handle on my misc spending.  I am just getting started with this whole process, hopefully over the course of the next year I can really get things under the microscope and cut our expenses/increase our savings. 

[RazorBurn]

Couple observations:

1) Are you contributing to 401k?  You have line items for salary deduction on Health Insurance, but nothing on 401k, 403b, or 457.

Yes, I put in max percentage that my company matches as does my wife.  Will have to work on the spreadsheet a bit to better track savings once I get it automated

2) I've never paid a water bill before but $150/mo sounds like a lot.  Any reason for that?

Actually it is usually about half that, but the utility company apparently only checks the meter every six months and they just found that it was stuck for the last six months.  Now I get penalized and have to make up the difference

3) Ditto on the electric bill...seems very high.

Hmmm, I'm in Florida but we're not extreme A/C users.  I'll have to poll my friends and see if we're out of line.

4) You should budget for blank items.  For example we budget $2000/yr for gifts. We save $167/mo into a little savings account and then draw from that when we buy something.  Keeps us in control because we only spend what is in that account never more.

Same thing for restaurants/starbucks.  Its fine if you go out to eat or get lattes, but be in control.  Say "we're going to budget $150/mo to restaurants" or "our starbucks allowance is $25/mo".  Then you know if you can go out to eat or not instead of just doing it willy nilly and adding it in later.

Yeah - this is really more of an expense report than a budget, but I'm working on filling it in - thus the zero amount line items. 

[iwasjustwondering]

My main comment is that you're counting 287K for home value, but you do have  mortgage.  So if you're not subtracting the mortgage amount from the 287K, you're not giving a realistic net worth projection.